How to Create a Back-to-School Budget

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As your kids trade in beach balls and bathing suits for notebooks and backpacks, you'll want to make sure you have enough cash stashed away to cover the essentials. Otherwise, you may need to spend more than you were expecting.

According to the National Retail Federation (NRF), in 2021 back-to-school spending hit a record high of $37 billion. And this year, if you have kids in K-12, expect to shell out an average of $864 on school items, a $15 increase from the year prior.

To avoid accumulating debt this school season, here's how to create a back-to-school budget that's reasonable and easy:

Jot Down Your Expenses

Before you whip out the credit card or hit "add to cart" on school supplies, gadgets, and clothes, jot down exactly what your kids anticipate needing this year. This might include:

School supplies (i.e., notebooks, pens, highlighters)
Computers, laptops, iPads
Accessories for electronics (i.e., phone call, chargers, earbuds)
Clothes
Face masks, hand sanitizer, and other PPE

If they're in college:

Bedding
Toiletries
Textbooks
Furniture for their apartment

Include Some Cushion

Once you've created an initial budget with the expenses and general costs, add a bit of padding. Since the pandemic, back-to-school spending has shot up, partly due to more equipment and supplies needed due to the shift in remote and hybrid learning. Another reason? Inflation is also at a 40-year high, with a 9.1% year-over-year jump in June 2022.

How much of a financial cushion you should tack on to your back-to-school budget depends, but aim to add about 10% to what you think you might need. So if you anticipate spending $800 this year, budget $880 instead. Or if you think you'll be spending closer to $500, tack on $50 for a grand sum of $550.

Use Those Gift Cards and Cash-Back Rewards

Now might be a good time to use those retailer gift cards and cash-back rewards from using your credit cards for online purchases. That way, you won't be forking over as much cash for back-to-school shopping.

To do this, go through your gift cards stash and check the remaining balance. You can also use a gift card organizer app such as Gyft, Santa's Bag, or Smash. You can also sell your gift cards for a portion of the balance on platforms such as Raise.com, GiftCash, and CardCash.

Cut Back on Your Current Expenses

To avoid going into debt, see if you can scale back on your expenses for the time being. There are plenty of ways to save, and it's often easiest to focus on one area to start. For instance, if you'd like to save on food, buy sale items at the grocery store, purchase in bulk, and cook at home. Or if you would like to cut back on entertainment, look for free or low-cost ways to have fun, or host a Netflix party night with some friends and family.

Shop Around-the-Year to Spread Your Budget

If possible, shop for back-to-school essentials year-round so you won't suffer from such a huge dent come fall. A great time to scoop up on computers and electronics is on Cyber Monday or Prime Day. And if you can wait a little longer, plan to purchase winter wear — think coats, sweaters, and scarves — in January or February.

Shop Used

Shopping used doesn't necessarily mean rummaging through the racks at your local Goodwill — although you might find fashionable items at a local thrift store. Your kids can find trendy clothing at affordable prices on secondhand clothing and accessories platforms such as Poshmark, Depop, and Tradesy.

Host a Free Marketplace Event

You can also save on back-to-school items by organizing a neighborhood free marketplace event. Ask participants to bring items specific for students, such as backpacks, electronics, supplies, and kid's clothes. Attendees can take what they like and offer what they like. Anything unclaimed can be donated to a thrift shop or to a nearby charity that's accepting tangible items.

Not sure where to find participants? You can post in community groups such as your local Nextdoor, Buy Nothing Project, or Time Bank chapter. To up the social aspect, turn it into a potluck and have everyone contribute a dish to share.

Educate Your Kids on Financial Basics

Back-to-School shopping is a great time to teach your kids financial basics such as budgeting, the opportunity costs of a purchase, and keeping track of their spending. If your kids are college-bound, educate them about credit, such as how to shop around for a credit card, what their financial responsibilities are when taking on student debt, and how to build credit as a student.

While back-to-school shopping can be expensive, creating a budget and finding ways to cut back can help keep you in the flush. Plus, turning it into a learning opportunity for your kids to become more educated about their finances can kill two birds with one stone.

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Jackie Lam

Jackie Lam is a personal finance writer whose work has appeared in Salon, Business Insider, and GOOD.